Crude-oil futures were steady in Asian trading Tuesday with the market still lacking any clear direction after last week's rally.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $93.14 a barrel at 0625 GMT--down $0.05 in the Globex electronic session. February Brent crude on London's ICE Futures exchange fell $0.05 to $111.35 a barrel.
Nymex crude climbed last week to its highest level since mid-October in a relief rally as U.S. lawmakers reached a deal on the fiscal cliff.
The benchmark has also narrowed its discount to Brent in recent days on news that the Seaway Pipeline will begin operations by the end of this week and allow surging U.S. crude production to flow from the oil-transit hub of Cushing, Okla., to Gulf Coast refineries. The gap, which reached its narrowest since September on Monday, was unchanged in Asian trading Tuesday.
Money managers raised their net long positions in both Nymex and Brent crude oil futures by 11% in the final week of the year suggesting optimism prices will rise.
Since then, broader investor sentiment has turned more bearish with Asian shares lower on doubts U.S. lawmakers will reach a deal to raise the country's debt ceiling.
"Our fundamental view on the oil market remains decidedly bearish," analysts at Raymond James said in a note.
They forecast global oversupply this year to reach close to 2 million barrels a day--which means "prices have to fall low enough to sharply curtail U.S. drilling activity and also convince Saudi Arabia to cut production."
Saudi Arabia--the world's biggest oil exporter--has kept production up in recent months in a bid to keep prices from spiking.
"Geopolitical concerns and overall economic optimism can, of course, prop up prices temporarily--as has been the case lately--but if inventories become as full as we think, a major oil correction becomes unavoidable," they said.
U.S. weekly oil data are expected to show crude oil stockpiles rose 1.6 million barrels last week, according to analysts surveyed by Dow Jones Newswires. The closely watched government survey from the Energy Information Administration is due to be released at 1530 GMT Wednesday.
Nymex reformulated gasoline blendstock for February--the benchmark gasoline contract--rose 86 points to $2.7860 a gallon while February heating oil traded at $3.0352, 31 points higher.
ICE gasoil for January changed hands at $937.75 a metric ton--down $0.75 from Monday's settlement.
Write to Jacob Gronholt-Pedersen at [email protected]
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